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Showing posts from July, 2014

Employee or Contractor?

The distinction between an employee and a contractor becomes very important when it comes time to file taxes. How can you tell if the person working for you is an employee or a contractor?

The IRS publishes a guide to help you distinguish between employees and contractors. The rules aren't hard-and-fast, though. The IRS breaks the worker's characteristics into three categories. Taken together, these characteristics determine the worker's tax status. 1. Behavioral Control This is the first of the IRS' three categories. Does the employer have the right to control what the worker does? What type, and how much, instruction does the employer give the worker? Is continual training provided? Does an ongoing evaluation system exist?

What does this look like? The employer decides: When and where the worker should perform the taskWhat tools or equipment the worker usesWhat workers to hire The employer will often give this type of instruction to employees. Contractors do not usually…

Proposed Form 1098 Changes Delayed

We heard that the IRS planned some changes to the reporting requirements for form 1098. These changes were scheduled to become active in the 2014 filing season. What happened?

When finance and banking groups caught wind of the proposed changes, they protested. According to these groups, the timing of the changes would put a burden on filers. This may seem strange, as much of the new information requested by the IRS is already kept by finance and banking groups. The format of the information became the crux of the issue.

In this post, we'll review the proposed changes to the 1098. We'll also consider why finance and banking groups had concerns.

Currently included on form 1098: An interest report for individual paying $600 or more.
New reporting proposed by the "Preserving America's Transit and Highways Act of 2014:"
The unpaid balance on the mortgageThe address of the property securing the mortgageThe loan origination dateReal estate taxes paid from ESCROWWhether …